# Behind the Deal: Calculating Radio Fees To ASCAP

## ASCAP and the Radio Music License Committee, which represents most of the 12,000 U.S. commercial radio stations, announced Oct. 18 a set-fee agreement for over-the-air performances and simultaneous st

ASCAP and the Radio Music License Committee, which represents most of the 12,000 U.S. commercial radio stations, announced Oct. 18 a set-fee agreement for over-the-air performances and simultaneous streaming of more than 7.5 million musical works.

The agreement finalizes license fees from 2001 to 2003 and establishes new licenses for 2004-09.

Which radio stations are part of this agreement, and how much will they pay? The RMLC provides the following information on the agreement.

The Stations: Other than those represented by the National Religious Broadcasters Music License Committee, nearly all of the 12,000 U.S. commercial stations are bound by the new agreement.

According to the RMLC, many stations authorized the committee to represent them in negotiations or litigation with ASCAP, and nearly all other stations entered into interim license agreements with ASCAP under which they agreed to be bound by the outcome of the negotiation and litigation conducted by the RMLC.

Fee Calculations: For the years 2001-2003, there is no retroactive adjustment. No further payments will be due for those stations that paid their fees for 2001, 2002 and 2003. Specific calculations for these past amounts were not provided.

For the period 2001-09, the radio industry will pay ASCAP roughly \$1.725 billion under the following industrywide schedule: \$152 million (for 2001), \$161 million (2002), \$166.22 million (2003), \$176.45 million (2004), \$192.55 million (2005), \$208.65 million (2006), \$213.98 million (2007), \$222.7 million (2008) and \$231.43 million (2009).

For 2004, each station's fee is calculated under a formula that essentially takes the station's 2003 fee and adds an increment of approximately 6.1%, with certain exceptions spelled out in the agreement.

Generally, a station's fee for each year from 2005 to 2009 will be calculated under the following methodology, which includes a benchmark fee plus a share of the above industrywide fee.

To determine a station's fee, the agreement first categorizes radio stations.

Stations are either blanket stations (those with a music format that pay a blanket, or set amount, for all repertoire performed) or per-program stations (those with non-music formats where licenses are obtained for each program rather than for all music performed).

Blanket stations fall into one of three groups. Each will pay a benchmark fee, which normally equals its 2004 blanket fee.

Group A blanket stations are those in the top 100 Arbitron Metro Service Areas (MSAs), with an average quarter-hour audience during a week of 5,000 or more (based on an average quarter-hour-audience of persons 12 years or older during certain periods of time specified in the agreement).

This group will pay the benchmark fee plus 65.7% of the industrywide amount due above. Each station will pay an amount equal to its benchmark fee (the station's 2004 blanket fee) plus its share of the group's industrywide amount, calculated as an amount equal to the station's share of the total average quarter-hour audience for all group A stations.

Group B stations are in the top 100 MSAs with an average quarter-hour audience of less than 5,000 during the time specified. This group will pay its benchmark fee (2004 blanket fee) plus 5.6% of the industrywide amount.

Group C stations are outside the top 100 MSAs during the time specified. This group will also pay its benchmark fee (2004 blanket fee) plus 28.7% of the industrywide amount.

Group B and C stations will pay their benchmark fees plus a percentage of that amount. The percentage will be calculated by dividing the total industrywide amount due from its group by the total benchmark fees due from the group.

Each year, per-program stations will each pay the following percentage of the previous year's benchmark fee:

For 2005, 109.1% of the 2004 benchmark fee; 2006, 108.4%; 2007, 102.5%; 2008, 104.1%; and 2009, 103.9% of the 2008 fee.